1. Purificación Martínez President, NC AAUP UNC Faculty Assembly January 21, 2011

2. The AAUP's purpose is to advance academic freedom and shared governance, to define fundamental professional values and standards for higher education, and to ensure higher education's contribution to the common good. 2

3. ACADEMIC FREEDOM: Freedom to pursue ideas in teaching, research, governance and extramural speech across the ideological spectrum. TENURE: Fairness and security of due process and peer review, about workplace justice for professionals that protects academic freedom. SHARED GOVERNANCE: Values of independent faculty voice strengthened by academic freedom. 3

4. The faculty should be involved in the entire range of decision making that bears, whether directly or indirectly, on its responsibilities because:  This involvement is an efficient means to accomplish the institution’s mission.  Teaching and research are the very purpose of an academic institution and the reason why the public values and supports it. 4

5.  It is shared governance, or the joint effort of trustees, administration and faculty in the governance of the institution, that frames the imperative that there be early, careful and meaningful faculty involvement in the financial decisions of the institution.  The faculty must sufficiently and meaningfully participate in decision making regarding: hiring and salary freezes, furloughs, salary cuts, layoffs, non-renewals, reduction or elimination of academic colleges and programs, revision of curricula, changes in academic policy, elimination of tenure, substantial changes in workload. 5

6. BAD: Budgets. A budget is a plan and includes only assumptions about future revenues and expenses. BETTER: Audited financial statements. They are the true indicators of where the money is coming from and where it is going. BEST: Several years of audited financial statements, including the most recent. In order to assess the ongoing financial health of the institution, it is necessary to look at several years of financial reports. 6

7. The faculty must participate in preparation and decisions about budgets; therefore, we must receive complete financial information, with a level of detail sufficient to inform judgment, before major decisions are made. This means:  The budget for the 2011-12 year needs to be put on line in summary form (by division), and in detail (for each account).  Budgets need to include overall revenues (tuition, state appropriation, auxiliaries) and expenditures (what is being spent). 7

8. There needs to be a Budget Committee, composed entirely or predominantly of faculty. The chief academic officer should be an ex-officio member of that committee. Among its functions:  Consider budget policies, priorities, procedures, and practices, with emphasis on the academic budget.  Advise the provost/chancellor/chief financial officer on budget-related matters.  Gather independent information and conduct independent studies about budget issues.  Provide input on budget decisions.  Participate in campus long-range planning.  Provide regular reports, at least once each semester, to the faculty senate.  Offer counsel to the senate leadership in the formulation of policy recommendations and resolutions concerning budgetary matters.  Propose both long- and short-term strategies for budget issues.  Monitor institutional budget decisions.  Recommend policies for schools and departments to use in implementing campus- wide budget decisions.  Serve as main conduit of budget information for the faculty (i.e. provide ongoing education for the entire faculty, educate faculty about particular budget proposals). 8

9. The state is cutting the appropriations. Under these circumstances, there are two absolute musts for serious budget planning:  PRIORITY 1: You need to know what % of the total comes from the State. And what % comes from tuition, etc.  PRIORITY 2: You need to create different scenarios that combine different assumptions about: * The % CHANGE in that appropriation. * The percent change expected in enrollment. * The percent change expected in the price of tuition. 9

10. Implications:  It is necessary to consider 3 different scenarios for each of the above metrics (appropriations, expected enrollment, tuition).  This means that you have3 x 3 x 3 or 27 different assumptions on where revenues are going. This is necessary for any serious budget planning!!! *For certain institutions this scenario could be even more complicated, if you take into consideration things such as endowment income, for example. 10

11. Usually the state funds are not designated for specific types of activities (typical exceptions are capital funds), so institutions, according to the UNC Budget Flexibility Guidelines, have a great deal of flexibility in using the state funds as they see fit. Besides the state appropriations there are other funds that need to be budgeted, and faculty and staff should see those budgets as well. Examples of other funds:  Auxiliary budgets on housing and dining.  Athletics budgets. 11

12. Remember: Teaching and research are the very purpose of an academic institution and the reason why the public values and supports it. We must: make sure that the expenditure on instruction has not declined /is not declining. How to do it:  Look at prior budgets (  ) /audited financial statements ( ).  See what percentage has gone to expenditure on instruction.  Make sure that that percentage has not declined / is not declining under the proposed new budget. 12

13. The following are major finds in the report by the Delta Cost Project titled “Trends in College Spending, 1998-2008. Where Does the Money Come From, Where Does it Go, What Does It Buy?” (http://www.deltacostproject.org/resources/pdf/Trends-in-Collegehttp://www.deltacostproject.org/resources/pdf/Trends-in-College Spending-98-08.pdfSpending-98-08.pdf):  There are wide variations between states in the ways they invest in higher education (in NC, student share of cost is 35%, while national average is 51%).  There is a growing dependence in higher education on tuition revenues, now the most stable and predictable source of revenues.  In state universities, tuition is going up because of cost-shifting—meaning that instead of cutting spending in the face of revenue declines, institutions consistently shift to higher tuitions.  Over time there has been a gradual shift of resources away from instruction and towards general administrative and academic infrastructure. So keep in mind:  Cuts in non-core or administrative areas in the last (couple of) year(s) do not negate prior increases.  It is necessary to look at annual percentages of change in instruction areas as well as 4 or 5 year % changes.  It is necessary to understand how the institution defines administrative and academic infrastructure positions. 13

14. There are times in which institutions find themselves in bona fide financial exigency, i.e. in a financial crisis that threatens the survival of the institution as a whole, or bona fide need to discontinue programs or departments. What then? Go to: http://www.aaup.org/AAUP/Financial/Policy/ and to the UNChttp://www.aaup.org/AAUP/Financial/Policy/ Code, Chapter 605, Termination of Faculty Employment. (http://www.northcarolina.edu/policy/index.php?pg=vb&node_id=4432)http://www.northcarolina.edu/policy/index.php?pg=vb&node_id=4432 And always:  Ask WHY.  Request to see the documents that prove it.  Insist that these decisions be based on educational considerations as determined by faculty. 14